Oil world says fossil fuels most realistic for now

* Fossil fuels the way to meet energy needs

* December deadline on Copenhagen hard to meet

* Natural gas the ideal bridging fuel

By Christopher Johnson and David Sheppard

LONDON, Oct 21 The world must invest heavily in
fossil fuels or face an energy crisis, said leaders of the oil
industry gathered in London this week as they voiced scepticism
about prospects for a climate change deal in Copenhagen.

The oil industry has shifted its message to a more
climate-friendly approach, but argued that for now oil and gas
were the ways to meet the world's energy needs.

"There is no getting away from fossil fuels," said Nigerian
Oil Minister Rilwanu Lukman, speaking on the sidelines of the
Oil and Money industry conference.

As the oil minister of an OPEC member country, his view was
not surprising, but many others at the conference predicted a
December deadline to replace or extend the Kyoto Protocol on
cutting planet-warming emissions would not be met.

"I think at the moment we are concerned that there probably
won't be any deal in Copenhagen, I'm afraid. That is I think
what the industry is beginning to feel," said Ian Taylor, chief
executive of Vitol, one of the world's largest energy traders
and a major player on the carbon market.

Chief executives were less direct, but still sceptical.

"In some cases, there are high expectations, other countries
indicate this is just a base step as we approach a pretty
complex subject, so it's difficult for me to really say," said
Jim Mulva, CEO of ConocoPhillips, when asked about the chances
of a Copenhagen deal.

"We want to be part of the public debate because viewpoints
and ideas have been formulated, continue to be formulated, even
though may be the whole (situation) has not been completed and
may not be completed for another year or two," he said further.

The danger, meanwhile, was crude supply would not meet
demand, which Mulva saw rising from today's levels of roughly 85
million barrels per day.

"It's going to be very difficult to get up towards 100
million barrels," Mulva told reporters.

He predicted a margin of spare capacity would be swiftly
eroded and said the cost of new supplies had not fallen as
rapidly as the oil price. It has rallied to around $80 a barrel
from a December low of little more than $30, but it is still
little more than half the July 2008 record of almost $150.

Others agreed the need was to invest in conventional fuel.

"If we do not act now, we will have a devastating oil crisis
in the next five to 10 years," John Hess, CEO of Hess Corp, said
in a speech.

"We will ultimately be at risk of supply rationing demand
through sky-rocketing prices that will threaten economic
stability and prosperity."

EIGHTY PERCENT OF NEEDS

British oil major BP estimates that by 2030, fossil fuels
will still meet about 80 percent of energy needs.

"I believe that in the realm of alternatives, it's dangerous
to promise too much too soon," said its CEO Tony Hayward in a
conference speech. "So we're talking about an evolution -- not a
revolution in the energy mix."

Hayward put forward natural gas as the ideal transition
fuel, as a means of moving away from coal, which is far more
carbon intensive, for power generation. Gas has the merit of
relying on proven technology.

He also advocated second-generation biofuels, which in
contrast to early biofuels, did not compromise food production,
he said.

OPEC's Secretary General Abdullah al-Badri disagreed.

"Biofuels will not work. You can't use your food to have
energy," he said and went on to rule out nuclear power, which
many in the energy industry regard as a low-carbon option.

"Nuclear energy is just waiting for a catastrophe," he said.

The Organization of the Petroleum Exporting Countries, which
pumps around one third of the world's oil, next meets in Angola
on Dec. 22 to reconsider its output policy in talks rearranged
so as not to clash with the Copenhagen negotiations just before,
which oil ministers were also expected to attend.

The International Energy Agency (IEA), which represents
energy consumers, has warned of the dangers of too little
investment in fossil fuels, although it also signals the need
for many billions to be spend on alternative supplies.

"Oil will continue to grow," Nobuo Tanaka, executive
director of the IEA said during a panel session with the OPEC
secretary general. "But coal consumption must decline."
(Additional reporting by Tom Bergin, Alex Lawler, Daniel
Fineren and Barbara Lewis; writing by Barbara Lewis, editing by
William Hardy)

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